Mortgage interest payments are the biggest outgoing for most families. With a recent downturn in the economy, many households are struggling to meet their mortgage interest payments (especially those with a sub prime balloon mortgage)
If you find yourself in this situation there are a few things you can do to reduce your mortgage interest payments.
1. Speak to Your mortgage Lender and ask for a reduction
This may sound a little too good to be true. However, you would be surprised how many mortgage companies would actually like to help you keep paying your mortgage. It is in their interest to prevent you defaulting on your mortgage. If they have to repossess your house, they will lose considerably. Many big mortgage companies are already considering re negotiating mortgage deals to prevent defaulting. It is not guaranteed to work, but, for the time involved it is definitely worth trying.
2. Remortgaging.
Remortgaging to get the best deal is an essential part of having a mortgage. The monthly savings can be significant. The only problem is that some mortgage deals tie you in for a certain time frame. However, when the time frame ends, make sure you are ready to switch to the best mortgage deal.
3. Interest Only Mortgage.
Interest only mortgage will reduce your mortgage interest payments, because you are not paying any capital repayment but only the interest. There is a big drawback in that you are not making any capital repayments. This should just be seen as a short term solution. Perhaps you are on a very bad mortgage deal and you can’t move for a year. You could use an interest only mortgage to make your mortgage affordable for a year before you can switch to an affordable repayment mortgage.
4. Extend your Mortgage term.
If you increase the length of your mortgage term from 25 years to 50 years, the mortgage payments will be spread out over a longer time period. This will reduce your monthly payments, but increase the total cost of your mortgage. Therefore, it is a decision for you to make which is more important? lower monthly payments now or Paying off mortgage as soon as possible. However, I would suggest just because advisers say it is best to pay off a mortgage as soon as possible doesn’t mean it is is best for your circumstances. A 50 year mortgage is better than home repossession and paying rent
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